Alternative processing network for custom rewards transactions

ABSTRACT

A merchant point-of-sale (“POS”) system architecture is provided. Systems and methods are provided for enabling an alternative processing network for a custom rewards transaction performed at a POS. A custom rewards transaction may be a transaction in which a customer opts-in to a merchant-funded rewards (MFR) program. Opting-in to the MFR program may terminate the customer&#39;s default enrollment in a conventional issuer-bank funded rewards program. Opting-in to the MFR program may also reroute the processing of the transaction from a conventional processing network to the alternative processing network. The alternative processing network may incur transaction fees to a merchant that are lower than the transaction fees of the conventional processing network.

CROSS-REFERENCE TO RELATED APPLICATION

This application is a non-provisional of U.S. Provisional PatentApplication No. 62/586,409 filed Nov. 15, 2017 entitled “CUSTOM REWARDSPROTOCOL AND SYSTEM ARCHITECTURE” which is hereby incorporated byreference herein in its entirety.

FIELD OF TECHNOLOGY

This application relates to point-of-sale (POS) terminal credittransactions. Specifically, this application relates to alternativeprocessing networks for custom rewards credit card transactions that areinitiated at a POS terminal.

BACKGROUND OF THE DISCLOSURE

In an electronic payment scenario, a customer (the “customer”) maypurchase from a merchant or service provider (“the merchant”) goods orservices (“the product”) using credit (a “credit transaction”). Thepurchase may debit an asset account. The credit may be extended to thecustomer by an issuing bank (the “issuer”). The asset account may resideat the issuing bank or be held by another entity. The merchant maypresent the transaction to an acquiring bank (the “acquirer”). Theacquirer may pay the merchant for (and thus “acquire”) the product. Atransaction mediator in communication with the issuer and the acquirermay settle the transaction between the issuer and the acquirer.

A credit transaction may incur a plurality of fees. The transactionmediator may set network fees and collect those fees from the issuer andthe acquirer in connection with the settlement. The acquirer may collectan interchange fee. The merchant may absorb a cost of acceptance. Thecost of acceptance may be a transaction cost passed on for processingthe credit card transaction.

A credit transaction may earn the customer a transaction reward in arewards program. Rewards programs may deepen current customerrelationships and attract new customers. Rewards programs may offercustomers incentives to use their payment instruments to purchase goodsor services from merchants. Illustrative rewards include perks such asupgrades, cash-back, air-lines miles or “points.” Points may be utilizedto obtain goods or services from qualifying merchants. Customerstypically earn points by making qualifying purchases using a paymentinstrument provided by the issuer.

Typically, rewards programs are funded by the issuer, and do not promotemerchant specific spend, brand, or message.

It would be desirable to provide a custom rewards model, in which therewards may be provided by the merchant. A merchant-funded customrewards model may allow merchants to control and direct the marketingand loyalty of their brand. Accordingly, it would be desirable toprovide apparatus and methods for custom rewards protocols and systemarchitecture. To compensate for the merchant funding of the rewards, itwould be desirable to reduce the cost of acceptance associated with thetransaction. Accordingly, it would be further desirable to provide analternative transaction processing network that reduces the cost ofacceptance to a merchant in a transaction.

SUMMARY OF THE DISCLOSURE

Methods and apparatus for providing a dual-track point-of-sale (POS)terminal are disclosed. A POS terminal may enable a customer to purchaseone or more products from a merchant. The products may include goodsand/or services.

The customer may be enabled to link a payment instrument to the POSterminal to initiate a credit transaction for the products. The credittransaction may include a financial entity that is an issuer. The issuermay authorize a purchase. The issuer may also extend payment credit tothe customer for an authorized purchase. The issuer may collect amonetary sum from the customer as compensation for the payment credit.

A credit transaction may be processed via a processing network. Aprocessing network may enable the merchant to communicate to the issuera request for authorization of the credit transaction. The processingnetwork may also enable the issuer to communicate to the merchant aresponse to the authorization request. The response may be to grant ordeny the authorization.

The processing network may settle the credit transaction. Settlement mayinclude debiting the issuer a first monetary amount. The first monetaryamount may correspond to the purchase price of the products. At least apart of the first monetary amount may be credited to the merchant as asecond monetary amount. The second monetary amount may be the paymentthe merchant receives for providing the customer with the products. Thedifference between the second monetary amount and the purchase price ofthe products in the credit transaction may be a transaction costincurred by the merchant.

The credit transaction may be processed on one of two processingnetworks. A first processing network may be a default processingnetwork. The default processing network may include an acquirer bank anda transaction intermediary. The acquirer may process the transaction onbehalf of the merchant. Processing the transaction on behalf of themerchant may include communicating to the issuer a request forauthorization. Processing the transaction on behalf of the merchant mayalso include crediting the merchant with money for the transaction.Processing the transaction on behalf of the merchant may further includedebiting from the issuer a monetary amount for the transaction. Thetransaction intermediary may enable communication between the acquirerand the issuer.

A second processing network may be an alternative processing network.The alternative processing network may enable direct communication andsettling between the merchant and the issuer. Communication may includea request for authorization and a response to that request. Settlementmay include the issuer paying the merchant an amount of money for theproducts purchased in the transaction. The amount of money may be thepurchase price minus a transaction cost. The transaction cost may be acost of acceptance passed on to the merchant by the issuer. The cost ofacceptance may reflect a plurality of costs incurred by the issuer forthe transaction. The plurality of costs may include costs for hardwareand software associated with the transaction. The plurality of costs mayalso include carrier costs for the data communication in thetransaction. The issuer may pass on the transaction cost to the merchantto cover the issuer's own cost of the transaction, and not to profitfrom the merchant. The transaction cost associated with the alternativeprocessing network may be lower than the transaction cost associatedwith the default network.

A credit transaction may include a transaction reward. A transactionreward may be provided to the customer upon using the payment instrumentfor a purchase. The transaction reward may be associated with a firstvalue received by the customer, and a second value corresponding to thecost to a rewarder in providing the transaction reward. The first valuemay be higher than the second value.

The rewarder of a transaction reward may be associated with a rewardsprogram. In a conventional rewards program, the rewarder may be anissuer. In a merchant-funded rewards (MFR) program, the rewarder may bea merchant. An MFR rewards model may allow merchants to control anddirect the marketing and loyalty of their brand.

The dual-track POS terminal may notify the customer of two tracks ofrewards offered for a current purchase. A first track may include adefault, conventional award. A second track may include an MFR. The MFRmay have been formulated by a merchant computer system. The merchantcomputer system may be a computer system with at least one processor.

The dual-track POS terminal may be configured to receive a customerselection of one of the two tracks of offered rewards. A customerselection of the second track may opt the customer in to the MFRvis-à-vis the current purchase. Opting in to the MFR may terminate,vis-à-vis the current purchase, the customer's default enrollment in thefirst track of rewards. Opting in to the MFR may also reroutes theprocessing of the credit transaction vis-à-vis the current purchase.Rerouting the processing may include disassociating the credittransaction from being processed on the default processing network, andprocessing the credit transaction on the alternative processing network.When the customer completes a purchase while opted-in to the MFR, he orshe may receive the MFR transaction reward.

BRIEF DESCRIPTION OF THE DRAWINGS

The objects and advantages of the disclosure will be apparent uponconsideration of the following detailed description, taken inconjunction with the accompanying drawings, in which like referencecharacters refer to like parts throughout, and in which:

FIG. 1A shows an illustrative system architecture in accordance withprinciples of the disclosure;

FIG. 1B shows illustrative screenshots in accordance with principles ofthe disclosure;

FIG. 1C shows additional illustrative screenshots in accordance withprinciples of the disclosure;

FIG. 2 shows an illustrative diagram in accordance with principles ofthe disclosure;

FIG. 3 shows another illustrative diagram in accordance with principlesof the disclosure;

FIG. 4 shows yet another illustrative diagram in accordance withprinciples of the disclosure;

FIG. 5 shows an illustrative system in accordance with principles of thedisclosure;

FIG. 6 shows another illustrative system in accordance with principlesof the disclosure; and

FIG. 7 shows an illustrative flow chart in accordance with principles ofthe disclosure.

DETAILED DESCRIPTION OF THE DISCLOSURE

Methods and apparatus for providing a dual-track point-of-sale (POS)terminal are disclosed. A POS terminal may enable a customer to purchaseone or more products from a merchant. The products may include goodsand/or services.

The customer may be enabled to link a payment instrument to the POSterminal to initiate a credit transaction for the products. The credittransaction may include a financial entity that is an issuer. The issuermay authorize a purchase. The issuer may also extend payment credit tothe customer for an authorized purchase. The issuer may collect amonetary sum from the customer as compensation for the payment credit.The monetary sum may equal the purchase price of the product. Themonetary sum may include additional applicable fees and interest.

A credit transaction may be processed via a processing network. Aprocessing network may enable the merchant to communicate to the issuera request for authorization of the credit transaction. The processingnetwork may also enable the issuer to communicate to the merchant aresponse to the authorization request. The response may be to grant ordeny the authorization.

The processing network may settle the credit transaction. Settlement mayinclude debiting the issuer a first monetary amount. The first monetaryamount may correspond to the purchase price of the products. At least apart of the first monetary amount may be credited to the merchant as asecond monetary amount. The second monetary amount may be the paymentthe merchant receives for providing the customer with the products. Thedifference between the second monetary amount and the purchase price ofthe products in the credit transaction may be a transaction costincurred by the merchant. The transaction cost may be a cost incurred bythe processing network for processing the transaction. The processingnetwork may pass the costs on to the merchant.

The credit transaction may be processed on one of two availableprocessing networks in the system. A first available processing networkmay be a default processing network. The default processing network mayinclude an acquirer bank and a transaction intermediary. The acquirermay process the transaction on behalf of the merchant. Processing thetransaction on behalf of the merchant may include communicating to theissuer a request for authorization. Processing the transaction on behalfof the merchant may also include crediting the merchant with money forthe transaction. Processing the transaction on behalf of the merchantmay further include debiting from the issuer a monetary amount for thetransaction. The transaction intermediary may enable communicationbetween the acquirer and the issuer.

A second available processing network may be an alternative processingnetwork. The alternative processing network may enable directcommunication and settling between the merchant and the issuer.Communication may include a request for authorization and a response tothat request. Settlement may include the issuer paying the merchant anamount of money for the products purchased in the transaction. Theamount of money may be the amount the issuer receives for thetransaction. The issuer may receive the purchase price of the productfrom the customer, minus a plurality of costs incurred by processing thetransaction. The issuer may pass along the amount of money to themerchant, the merchant thereby receiving the purchase price minus atransaction cost. The transaction cost associated with the alternativeprocessing network may be lower than the transaction cost associatedwith the default network.

A credit transaction may include a transaction reward. A transactionreward may be provided to the customer upon using the payment instrumentfor a purchase. The transaction reward may be associated with a firstvalue received by the customer, and a second value corresponding to thecost to a rewarder in providing the transaction reward. The first valuemay be higher than the second value.

The rewarder of a transaction reward may be associated with a rewardsprogram. In a conventional rewards program, the rewarder may be anissuer. In an MFR rewards program, the rewarder may be a merchant. AnMFR rewards model may allow merchants to control and direct themarketing and loyalty of their brand.

The dual-track POS terminal may notify the customer of two tracks ofrewards offered for a current purchase. A first track may include adefault, conventional award. A second track may include an MFR. The MFRmay have been formulated by a merchant computer system. The merchantcomputer system may be a computer system with at least one processor.

The dual-track POS terminal may be configured to receive a customerselection of one of the two tracks of offered rewards. A customerselection of the second track may opt the customer in to the MFRvis-à-vis the current purchase. Opting in to the MFR may terminate,vis-à-vis the current purchase, the customer's default enrollment in thefirst track of rewards. Opting in to the MFR may also reroute theprocessing of the credit transaction vis-à-vis the current purchase.Rerouting the processing may include disassociating the credittransaction from being processed on the default processing network, andprocessing the credit transaction on the alternative processing network.When the customer completes a purchase while opted-in to the MFR, he orshe may receive the MFR transaction reward.

In certain embodiments, the system may be configured to execute a partor all of a transaction within a predetermined time frame. In anexemplary embodiment, the rerouting and authorization of the credittransaction may be completed within a suitable amount of time from whenthe customer opts-in to an MFR transaction reward. The suitable amountof time may be 3, 4, 5, 6 or 7 seconds. The suitable amount of time maybe any amount of time after which a customer may become impatient.

In certain embodiments, the amount of time it takes to receive anauthorization over the alternative network may be less than the amountof time it takes to receive an authorization over a conventionalnetwork. For example, a conventional network may take 5 seconds. Analternative network may only take 3 seconds. The reduction in time maybe at least partially due to the more direct routing used by thealternative network.

In certain embodiments, the POS terminal may notify the customer of anavailable MFR offer within a predetermined time span after the customerinitiates a transaction at the POS terminal with the payment instrument.The suitable amount of time may be 3, 4, 5, 6 or 7 seconds. The suitableamount of time may be any amount of time after which a customer maybecome impatient.

In certain embodiments, the system may be configured to formulate offersof MFR transaction awards independent of the initiation of atransaction. For example, the merchant computer system may process a setof MFR rewards for each customer in a database. The processing may occurat predetermined intervals.

The MFR reward offers formulated independently of a transaction may bestored on a database in the merchant computer system. In one embodiment,the MFR reward offers may be communicated to the POS terminal inresponse to the initiation of a transaction at the POS terminal. Inanother embodiment, the MFR reward offers may be stored at the POSterminal. Storing the MFR reward offers at the POS terminal may decreasethe time it takes for the reward to be offered to the customer inresponse to the customer initiating a purchase at the POS terminal.

In other embodiments, the MFR transaction awards offered to the customermay be formulated in response to the customer initiating a transactionwith a payment instrument at a POS terminal. An advantage of thisembodiment may be the elimination of large databases of formulated MFRrewards.

Methods and apparatus for providing a merchant-funded rewards (MFR)payment system are disclosed. The system may include a point-of-sale(POS) terminal. A POS terminal may enable a customer to purchase one ormore products from a merchant. The products may include goods and/orservices.

The system may include a payment instrument. The payment instrument mayenable a customer to initiate a credit transaction at a POS terminal fora purchase. Exemplary payment instruments may include credit cards andsmart phones.

A credit transaction may include a financial entity that is an issuer.The issuer may authorize a purchase. The issuer may also extend paymentcredit to the customer for an authorized purchase. The issuer maycollect a monetary sum from the customer as compensation for the paymentcredit. The monetary sum may equal the purchase price of the product.The monetary sum may include additional applicable fees and interest.

A credit transaction may be processed via a processing network. Aprocessing network may enable the merchant to communicate to the issuera request for authorization of the credit transaction. The processingnetwork may also enable the issuer to communicate to the merchant aresponse to the authorization request. The response may be to grant ordeny the authorization.

The processing network may settle the credit transaction. Settlement mayinclude debiting the issuer a first monetary amount. The first monetaryamount may correspond to the purchase price of the products. At least apart of the first monetary amount may be credited to the merchant as asecond monetary amount. The second monetary amount may be the paymentthe merchant receives for providing the customer with the products. Thedifference between the second monetary amount and the purchase price ofthe products in the credit transaction may be a transaction costincurred by the merchant. The transaction cost may be a cost incurred bythe processing network for processing the transaction. The processingnetwork may pass the costs on to the merchant.

The credit transaction may be processed on one of two availableprocessing networks in the system. A first available processing networkmay be a default processing network. The default processing network mayinclude an acquirer bank and a transaction intermediary. The acquirermay process the transaction on behalf of the merchant. Processing thetransaction on behalf of the merchant may include communicating to theissuer a request for authorization. Processing the transaction on behalfof the merchant may also include crediting the merchant with money forthe transaction. Processing the transaction on behalf of the merchantmay further include debiting from the issuer a monetary amount for thetransaction. The transaction intermediary may enable communicationbetween the acquirer and the issuer.

A second available processing network may be an alternative processingnetwork. The alternative processing network may enable directcommunication and settling between the merchant and the issuer.Communication may include a request for authorization and a response tothat request. Settlement may include the issuer paying the merchant anamount of money for the products purchased in the transaction. Theamount of money may be the purchase price minus a transaction costpassed on by the issuer to cover the cost incurred by the issuer forprocessing the transaction. The transaction cost associated with thealternative processing network may lower than the transaction costassociated with the default network.

In certain embodiments, the alternative processing network may includean acquirer and/or a transaction mediator. The alternative processingnetwork may still have lower fees and/or costs than a conventional ordefault network.

A credit transaction may include a transaction reward. A transactionreward may be provided to the customer upon using the payment instrumentfor a purchase. The transaction reward may be associated with a firstvalue received by the customer, and a second value corresponding to thecost to a rewarder in providing the transaction reward. The first valuemay be higher than the second value.

The rewarder of a transaction reward may be associated with a rewardsprogram. In a conventional rewards program, the rewarder may be anissuer. In an MFR rewards program, the rewarder may be a merchant. AnMFR rewards model may allow merchants to control and direct themarketing and loyalty of their brand.

The system may include a merchant computer system. The merchant computersystem may include at least one processor. The merchant computer systemmay be located at a central merchant headquarters. The merchant computersystem may be located in an individual store. The merchant computersystem may be located in a POS terminal. The merchant computer systemmay be distributed over a plurality of devices. The merchant computersystem may be a “cloud” based virtual system.

The merchant computer system may be configured to formulate one or moreMFR transaction rewards to offer to the customer as an MFR rewardsprogram. The offer may include a qualifying payment instrument, aqualifying POS terminal. The offer may also include details of thetransaction reward that the customer earns upon making a purchase withthe qualifying payment instrument at the qualifying POS terminal.

The offer may be communicated to at least one notifying device. Anotifying device may notify a customer of an available MFR reward. Thenotifying device may be a computer. The customer may be notified viaemail on the computer. The customer may be notified with a pop-upmessage on the computer. The pop-up may be displayed while the customeris navigating a merchant website. The pop-up may be displayed while thecustomer is navigating a website participating with the merchant.

The notifying device may be a mobile phone. The mobile phone may displaythe MFR reward offer after it is formulated. The mobile phone maydisplay the MFR reward offer at a predetermined time. The predeterminedtime may be after a customer reached a threshold level of spending atthe merchant. The predetermined time may be when a customer is known tohave entered a predetermined location. The location may be a merchantstore. The location may be the store of a merchant competitor.

The notifying device may be a POS terminal. The POS terminal may notifythe customer of an available MFR reward when the customer initiates atransaction at the POS terminal.

In some embodiments, the POS terminal may be a merchant website oronline store being accessed by the customer on a computer device. Thepayment instrument may be credit card information that is entered at anonline checkout. The notifying device may be the costumer's mobilephone. The notifying device may also be the computer itself. Forexample, the customer may be browsing a merchant's online store. Themerchant computer system may recognize the IP address of the customer'scomputer. If the customer is logged in to an online account, themerchant computer system may recognize the account. The merchantcomputer system may direct a message to notify the customer of anavailable MFR reward. The message may be a text message or pushednotification on the customer's mobile phone. The message may also be apop-up on the computer.

The notifying device may be configured to display the offer to thecustomer and receive a selection from the customer. A selection mayinclude the opting-in to one or more of the offered MFR transactionrewards. A customer may select to opt-in to an MFR transaction award inor regarding a particular purchase. The customer opting-in may terminatethe customer's default enrollment in the conventional rewards program.The termination may only be for the particular purchase. In someembodiments, the termination may be for all purchases at the merchant.

The customer opting-in may also reroute the processing of the credittransaction. Rerouting may include the disassociation of the credittransaction from being processed on the default processing network, androuting the processing of the credit transaction to the alternativeprocessing network. The rerouting may only be for the particularpurchase. In some embodiments, the termination may be for all purchasesat the merchant.

Processing networks may include records of credit transactions. When acredit transaction that is opted-in to MFR rewards is rerouted to analternative processing network, the default processing network may stillhave a record of the transaction or a request for authorization. In someembodiments, the rerouting may include the deletion of any part of thererouted transaction or authorization from the records of the defaultprocessing network.

An opted-in customer who makes a purchase with a qualifying paymentinstrument at a qualifying POS terminal may enable the customer toreceive the MFR transaction reward. The transaction may continue to beprocessed on the alternative processing network. The processing on thealternative processing network may cost less for the parties involved inthe transaction. The processing on the alternative processing networkmay also expedite the processing time due to the direct nature of thenetwork and the involvement of fewer parties.

In certain embodiments, the system may be configured to execute a partor all of a transaction within a predetermined time frame. In anexemplary embodiment, the rerouting and authorization of the credittransaction may be completed within a suitable amount of time from whenan opted-in customer initiates a credit transaction with a qualifyingpayment instrument at a qualifying POS terminal. The suitable amount oftime may be 3, 4, 5, 6 or 7 seconds. The suitable amount of time may beany amount of time after which a customer may become impatient.

In certain embodiments, the amount of time it takes to receive anauthorization over the alternative network may be less than the amountof time it takes to receive an authorization over a conventionalnetwork. For example, a conventional network may take 5 seconds. Analternative network may only take 3 seconds. The reduction in time maybe at least partially due to the more direct routing used by thealternative network.

In certain embodiments, the MFR transaction awards offered to thecustomer may be formulated independent of the initiation of atransaction. The merchant computer system may be directed to formulate aset of MFR rewards for a particular set of customers. The merchantcomputer system may be directed to formulate a set of MFR rewards for anentire database of customers. The merchant computer system may beconfigured to formulate a set of MFR rewards at predetermined intervals.For example, the merchant computer system may be configured to formulatea set of MFR rewards for all customers every Monday morning at 6 A.M.EST.

A set of MFR rewards that were formulated independent of customeractivity may also be notified to the customer on a notifying deviceindependent of customer activity. For example, the merchant computersystem may be configured to communicate to the notifying device a set ofMFR rewards every Monday morning at 7 A.M. EST.

In certain embodiments, a set of MFR rewards that were formulatedindependent of customer activity may be notified to the customer on anotifying when the customer initiates a transaction. In otherembodiments, a set of MFR rewards that were formulated independent ofcustomer activity may be notified to the customer on a notifying whenthe customer enters a predetermined location. The predetermined locationmay be a merchant store. The predetermined location may be the store ofa competitor to the merchant.

In certain embodiments, the MFR transaction awards offered to thecustomer may be formulated in response to the customer initiating atransaction with a payment instrument at a POS terminal. In otherembodiments, the MFR transaction awards offered to the customer may beformulated in response to the customer entering a predeterminedlocation.

In certain embodiments, a customer selection to opt-in to an MFR isstored locally at a qualifying POS terminal. In other embodiments, acustomer selection to opt-in is stored on the merchant computer system.A POS terminal may be configured to communicate with the merchantcomputer system when a transaction is initiated. The communication mayquery the merchant computer system to ascertain whether the transactionqualifies for MFR rewards and/or alternative processing networkprocessing.

In another embodiment, the payment instrument may store informationpertaining to MFR rewards. The POS terminal may access the informationand process the transaction accordingly. It may be unnecessary for thePOS terminal to query the merchant computer system.

Methods and apparatus for electronically processing credit card paymentsare provided. The method may include formulating, on a merchant computersystem processor, a set of merchant-funded rewards (MFR) to offer to acustomer. The offer may include a qualifying payment instrument, aqualifying point-of-sale (POS) terminal, and details of the reward.

The method may include notifying the customer of the MFR offer via anotifying device. The method may further include receiving a requestfrom a customer to opt-in to the MFR. In response to receiving therequest, the qualifying payment instrument of the customer may be linkedto the MFR offer. When so linked, the default customer enrollment in aconventional, issuer-bank-funded rewards program may be terminated.

The method may include receiving an authorization request from themerchant to process a transaction initiated by the qualifying paymentinstrument. The transaction may have been initiated at the qualifyingPOS terminal. In response to receiving the authorization request fromthe merchant, it may be detected that the payment instrument is linkedto the MFR offer. When, it is detected that the payment instrument islinked to the MFR offer, the processing of the transaction may bererouted.

The rerouting may be from a traditional processing network to analternative processing network. The traditional processing network mayinclude an acquirer bank and a transaction mediator. The transactionmediator may enable communication and monetary exchanges between themerchant-side acquirer and the customer-side issuer to settle thetransaction. The alternative transaction network may include a directconnection between the merchant and the issuer. The direct connectionmay enable communication and monetary exchanges to settle thetransaction. Both the traditional and alternative processing networksmay involve passing on the merchant a cost for processing thetransaction. In the method, the cost passed on by the traditionalnetwork may be more than the cost passed on by the alternative network.

A customer who makes a purchase with a linked payment instrument at aqualifying POS terminal may receive the MFR transaction reward. Thetransaction may continue to be processed on the alternative processingnetwork. The processing on the alternative processing network may costless to the parties involved in the transaction. The processing on thealternative processing network may also expedite the processing time dueto the direct nature of the network and the involvement of fewer partiesthan are involved in a traditional processing network.

In certain embodiments, the linking of the payment instrument to the MFRoffer and the rerouting of the processing to the alternative network, inresponse to a customer request in a current transaction, is onlyvis-à-vis the current transaction. In other embodiments, the reroutingof the processing to the alternative network, in response to a customerrequest in a current transaction, becomes the default processing routefor every purchase from the merchant using the payment instrument. Instill other embodiments, the linking of the payment instrument to theMFR offer, in response to a customer request in a current transaction,becomes the default rewards program for every purchase from the merchantusing the payment instrument.

In certain embodiments, the method may include executing a part or allof a transaction within a predetermined time frame. In an exemplaryembodiment, the rerouting and authorization of the credit transactionmay be completed within a suitable amount of time from when a customerinitiates a credit transaction with a linked payment instrument at aqualifying POS terminal. The suitable amount of time may be 3, 4, 5, 6or 7 seconds. The suitable amount of time may be any amount of timeafter which a customer may become impatient.

In certain embodiments, the amount of time it takes to receive anauthorization over the alternative network may be less than the amountof time it takes to receive an authorization over a conventionalnetwork. For example, a conventional network may take 5 seconds. Analternative network may only take 3 seconds. The reduction in time maybe at least partially due to the more direct routing used by thealternative network.

In an electronic payment scenario, a customer (the “customer”) maypurchase from a merchant or service provider (“the merchant”) goods orservices (“the product”) using credit. The purchase may debit an assetaccount. The credit may be extended to the customer by an issuing bank(the “issuer”). The asset account may reside at the issuing bank or beheld by another entity. The merchant may present the transaction to anacquiring bank (the “acquirer”). The acquirer may pay the merchant for(and thus “acquire”) the product. A transaction mediator incommunication with the issuer and the acquirer may settle thetransaction between the issuer and the acquirer. The transactionmediator may be a whole or part of a transaction network. Thetransaction network may be a transaction processing network. Thetransaction mediator may collect fees from the issuer and the acquirerin connection with the settlement.

Settling the transaction may include the transaction network receiving aplurality of transactions from the acquirer. Each of the plurality oftransactions may comprise an amount authorized by the issuer. Thetransaction network may debit an account of the issuer for the amountauthorized and credit an account of the acquirer the amount authorized.

Settlement may include a transfer of funds between two or moretransaction participants. The transfer may be a “book transfer,” aninter-bank transfer or any suitable transfer between the transactionparticipants. A settlement network may transfer the funds between thetransaction participants. Illustrative settlement networks may includethe Federal Reserve Wire Network (“Fedwire”) and other suitablesettlement networks that are well known to those of ordinary skill inthe art. The settlement network may be any suitable network linking oneor more accounts of the transaction participants.

One transaction participant may collect a fee from another transactionparticipant. The fee may include a point-of-sale terminal rental fee,network fees, and any other suitable fees. The fee may be a fixed feefor a transaction. The fee may be a percentage of a transaction. The feemay be a fixed fee and/or a percentage of the transaction.

Transaction networks and associated communication pathways areconventionally constructed to transfer fees from the acquirer, throughthe transaction processing network, to the issuer. For example, theissuer may transfer to the acquirer a purchase amount of the product,net fees. The collected fees may be used by a transaction participant tocover costs associated with the transaction. Exemplary costs may includeacquiring credit customers, servicing credit accounts, providingincentives to retain customers, mitigating fraud, covering customercredit risk, group compensation and other expenses.

The acquirer may deduct fees from the amount that the acquirer pays themerchant in exchange for the product. Such a deduction may be called a“merchant discount.” Such a deduction may alternatively be called a“transaction cost,” or a “cost of acceptance.” The merchant discount mayinclude the acquirer's fee, interchange fee and other expenses.

Transaction processing networks and transaction processing networkservices are offered under trademarks known to those of ordinary skillin the art. Transaction processing networks may set interchange rates.Issuers may refund or reimburse all and/or a portion of the merchant'scost of acceptance. Interchange rates often depend for each transactionprocessing network on merchant type and size, transaction processingmethod, transaction volume and other factors.

Currently, issuers may offer reward programs associated with creditand/or debit payment instruments. Such payment instruments may includecredit cards, debit cards, instruments or devices that include a contactchip, such as an ISO14443-compliant contactless chip, or otherelectronic purchasing devices such as smart phones or tablets(collectively hereinafter, payment instruments). Payment instruments mayinclude payment instrument information stored on a mobile device (e.g.,smart phone) or accessible via a mobile device. Illustrative paymentinstrument information is shown below in Table 2.

TABLE 2 Illustrative Payment Instrument Information Issuer Transactionnetwork Customer name Expiration date Card security code (“CSC”) Cardverification data (“CVD”) Card verification value (“CVV,” “CVV2,” “iCVV”or “Dynamic CVV”) Card verification value code (“CVVC”) Cardverification code (“CVC” or “CVC2”) Verification code (“V-code”) Cardcode verification (“CCV”) Signature panel code (“SPC”) Customeridentification number (“CID”) Card account number Brand Rewards ProgramID Affinity

Rewards programs may deepen current customer relationships and attractnew customers. Rewards programs may offer customers incentives to usetheir payment instruments to purchase goods or services from merchants.Illustrative rewards include perks such as upgrades, cash-back, airlines miles or “points.” Points may be utilized to obtain goods orservices from qualifying merchants. Customers typically earn points bymaking qualifying purchases using a payment instrument provided by theissuer.

Typically, rewards programs are funded by the issuer. For example, whena customer uses earned points to obtain goods/services, the issuer mayreimburse the merchant for at least a portion of the cost of thegoods/services provided to the customer.

Merchants pay fees to the acquirer, including terminal rental fees,network fees and other fees, for processing payment instrument payments.Such fees may include fees imposed by a network. Fees paid by theMerchants may be leveraged to compensate an issuer for accepting acredit risk associated with payment instruments and/or compensate anissuer for other costs associated with administering a card program. Theissuer may allocate, directly or indirectly, a portion of the fees tofund rewards or other programs to promote payment instrument usage.

It would be desirable to design a model and associated electronicpayment processing architecture that provides customers with reward-typeincentives to use payment instruments, but allows issuer to rebate anyfees paid by the merchants and allow merchants to control and direct themarketing and loyalty of their brand. Accordingly, it would be desirableto provide apparatus and methods for custom rewards protocols and systemarchitecture.

A custom rewards protocol may be associated with an alternativeprocessing network. The alternative processing network may include adirect line of communication and account settlement between the merchantand the issuer. The alternative processing network may have reduced feesand/or latency over a conventional processing network.

A merchant may use a conventional processing network for conventionaltransaction that are not enrolled in a custom reward program. Theadvantages of a conventional processing network may include merchantloyalty to an acquirer bank. With the custom rewards program, however, amerchant may establish ties to the issuer, and enable a cheap, efficientalternative processing network. The establishment of the alternativeprocessing network may enable a merchant to offer custom rewards. Themerchant may desire to offer custom rewards to boost the merchant'sbusiness.

Protocols and architecture described herein may implement custom rewardprograms. A custom reward program may include a merchant-funded rewardsprogram. A merchant may identify one or more rewards it wishes to makeavailable to its customers. For example, an eatery may offer a freedrink after a customer has spent a requisite amount of money at theeatery or has dined a threshold number of times at the eatery. Themerchant may strategically identify a reward that provides a largerperceived value than an actual cost or price of the reward.

Such rewards may be non-monetary such as upgrades, free items, enhancedservice and/or preferred service times. Rewards may include monetaryrewards such as cash-back. Rewards may be provided instantly at a POS,applied as an instant statement credit or accrued and redeemed atspecified or selected times intervals.

Whatever the reward, it is funded by the merchant. In some embodiments,the reward may be jointly funded by the merchant and the issuer. In someembodiments, the merchant may partner with any suitable party to offerand fund a reward.

In some embodiments, the merchant may provide information aboutavailable rewards to the issuer. The issuer may promote the reward tocustomers (e.g., payment instrument holders). For example, the issuermay display the reward to customers from within an app or online bankingportal provided to customers by the issuer.

The merchant may promote the available reward. The merchant may promotethe reward in its store locations (online or brick and mortar) using anysuitable media or medium. The merchant may display the reward tocustomers from within an app provided to customers by the merchant.

An app running on a mobile device, such as a smart phone, may pushnotifications to customers regarding available merchant-funded rewards.When the app is provided by a relatively high profile issuer (e.g., anissuer with many more customers than a merchant), the less visiblemerchants may be provided access to a top tier mobile app and largerpool of customers than would have typically be available to themerchant.

The merchant may leverage availability of the reward to drive customertraffic to the merchant's locations and products/services. The merchantmay leverage the reward to drive customer traffic to slower grossinglocations. Merchant funding the reward may, directly or indirectly,promote a payment instrument of the issuer and associated spending onmerchant products. The issuer may leverage available rewards to drivecustomers toward specific payment instruments offered by the issuer andassociated with the rewards program.

A customer may be required to affirmatively “opt-in” to amerchant-funded reward program. The customer may opt-in using anelectronic platform provided by the issuer or the merchant.

In response to merchant funding of a reward, the issuer may rebateinterchange or other fees for transactions involving customers and/orpayment instruments that have opted-in or are otherwise associated witha MFR program. The issuer may provide a rebate to the merchant as a wayof passing on savings results from merchant funding of rewards.

Such merchant-funded rewards may increase a volume of payment instrumenttransactions by enabling and allowing merchants to control a substanceof the reward, control marketing associated with promoting the rewardand reduce merchant cost of acceptance associated with transactions.

However, such a rewards model, while novel and innovative, may beassociated with a disruption of traditional electronic payment systemarchitecture.

For example, under the new merchant-funded rewards paradigm,functionality may be required for a customer to choose between standardcard reward (e.g., issuer funded rewards) or a merchant-funded rewardavailable from a participating merchant. Functionality would also needto be provided to allow coordination between the issuer and merchant fordetermining eligibility for rewards and tracking when a reward has beenpaid out to a customer. This functionality may work with or withoutparticipation of the merchant's acquirer.

Such functionality may allow a customer (using a payment instrument) toreceive regular product rewards if a merchant-funded reward is notselected or receive regular product rewards if the customer makes apurchase from a merchant that does not participate in themerchant-funded rewards program.

The merchant-funded rewards paradigm may yield reduced cost ofacceptance rates for the merchant on purchases associated with activatedcards (e.g., customers that have opted-in to a specific reward programoffered by the merchant). The paradigm may convert savings on costs ofacceptance into directed marketing benefits that may increase salesvolume of the merchant. Furthermore, reduced costs of acceptance may berebated through rebates provided by acquirer to merchant.

The issuer may also derive benefit from partnering with the merchant'spromotion of the reward. For example, merchant efforts to promote therewards also promote the brand, loyalty and purchasing behaviorassociated with the issuer's purchasing instrument. Such a relationshipmay provide an economic model that promotes mutually beneficial growthand value.

The customer may also benefit from a merchant-funded reward paradigm.For example, the customer may obtain a reward of greater value (actualor perceived) when the customer selects or “opts-in” to themerchant-funded reward. The customer may also be able to select rewardsthat better fit their priorities or needs.

By partnering with an issuer, the merchant may link its rewards programto a payment instrument that the customer may use at a variety ofmerchant locations. The customer benefits from a payment instrument thatmay be used ubiquitously at different merchant locations in differentgeographic locations.

The rewards program may also deepen customer loyalty to the merchantand/or issuer. For example, rewards offered by the merchant may be tiedto other products or services offered by the merchant. The rewards mayinclude offering the customer faster service or “bonus” products whenmaking what otherwise would have been a routine purchase. Such rewardsoffered by the merchant may provide an incentive for customers to shopat a participating merchant location to earn and obtain the rewards.

The merchant may benefit by having the merchant's brand promoted as areward option regardless customer's final rewards selection. Themerchant may control marketing messages and behavior requirementsdelivered to customers. Furthermore, the issuer may promote themerchant's reward using one or more of the issuer's platforms forcommunication with customers. Additionally, the merchant may benefit byconverting savings in card acceptance fees to marketing efforts that mayincrease sales.

From an issuer's perspective, the custom rewards paradigm provides a newand innovative product that enriches the issuer's value propositionassociated with its purchasing instrument products. The issuer may alsobenefit by acquiring new customers as result of the merchants marketingefforts.

System architecture may include mechanisms whereby merchants can submitrewards options and customers can opt-in to be eligible to earn therewards alternatives. System architecture may also provide one or moresystems that enable deployment of varying fee structure for processingsuch transactions. The sub-systems may utilize unconventionalcommunication protocols and/or hardware to meet or exceed timingrequirements and industry standards associated with processingelectronic payments. For example, industry standards may demand that notmore than 2-3 seconds elapse from a time a customer swipes a paymentinstrument at a POS terminal until an authorization response is receivedfrom the issuer.

Because merchant-funded rewards may only be available at merchantlocations, it may be desirable to determine customer eligibility forsuch rewards in real time at a POS. It also may desirable to determinecustomer eligibility for such rewards before the customer approaches aPOS. Unconventional communication protocols and/or hardware may, inreal-time, determine custom reward eligibility and merchant cost for atransaction.

In some embodiment, the merchant may be credited for transactionprocessing fees in a batch settlement at predetermined time intervals.

Notifications of rewards availability may be pushed to customer viamobile device apps. Such apps may be provided by the issuer, merchant orany suitable entity. Rewards availability may be determined based on anysuitable factor. Illustrative factors include geolocation, spendanalysis, market data and/or social media data.

Embodiments may include a rewards market place. Such a market place mayinclude a real-time market where merchants may submit rewards andallowing customers to select rewards that meet their needs. In someembodiment, merchants may be able to view competitor's rewardssubmissions. Such a market place may provide a platform for real-timecompetition for customers.

Embodiments may include rewards routing protocols. Such protocols mayinclude mechanisms by which a merchant is notified of a customer'srewards selection. Such a selection may trigger the customer's paymentinstrument enrollment in an alternative or bypass transaction processingnetwork. The bypass transaction processing network may automaticallytrack customer reward activity and apply appropriate fee schedules. Feeadjustments may include reductions/rebates in transaction costs.

Customer may select reward options such as whether to receive rewards inreal-time or accrue rewards eligibility over time. Different rewards maybe made available depending on whether the customer selects to accruerewards or receive them in real-time.

Merchant-funded rewards and corresponding merchant benefits (e.g.,transaction cost adjustments) may be tracked at the merchant POSterminal. For example, when a customer who has opted-in to amerchant-funded reward program checks out, fees typically charged to themerchant at the time of the transaction may be reduced or rebated. Insome embodiments, the merchant may be responsible for providing systemsand architecture for tracking rewards and custom rewards activity. Insome embodiments, the issuer may provide systems and architecture fortracking rewards and custom rewards activity. Furthermore, such issuersystems may also track merchant credits for transactions. Credits may beearned by the merchant when a customer uses a payment instrumentassociated with a merchant-funded reward program. Systems andarchitecture may include transaction processing network integration toprocess and track reduced fees.

Embodiments may include integrating merchant credits and/or customrewards into digital forms of payment other than traditional creditcards. For example, systems and architecture may integrate with a cryptocurrency marketplace.

Customers may use any preexisting payment instrument deemed eligible bythe issuer for a rewards program. The customer may opt-in to amerchant-funded rewards program. In some embodiments, themerchant-funded reward program may be an exclusive rewards program. Forexample, an opt-in to the merchant-funded reward program may trigger anopt-out of other reward programs. Customers may opt-out ofmerchant-funded rewards programs at any time. Customers may opt back into traditional rewards at any time.

To access a merchant-funded rewards program, a customer may use apayment instrument in possession of the customer before themerchant-funded rewards program is rolled out. An issuer may determineeligibility for merchant-funded reward program. The issuer may providenotification of customer eligibility to a merchant in authorizationresponse provided to the merchant.

Apparatus for a real-time, dynamic offer platform is provided. Theplatform may include a plurality of consumer devices. The platform mayinclude a plurality of merchant devices. The platform may include avirtual display. The virtual display may be displayable on the pluralityof consumer devices and/or on the plurality of merchant devices.

One of the merchant devices may transmit a selectable reward option tothe platform. The transmission may be processed in real-time. Thetransmission may be processed using a batch mode processing. The virtualdisplay may be configured to display the transmitted reward option.

The virtual display, displaying the transmitted reward option, may bedisplayable on the plurality of consumer devices and/or on the pluralityof merchant devices. One of the consumer devices may receive a selectionof the transmitted reward option. Upon receiving the selection, theconsumer device may store the selected reward option.

At a point-of-sale, when the consumer device is used to finalize apurchase associated with the selected reward option, the consumer devicemay be configured to communicate with the point-of-sale. Thecommunication may include termination of a custom communicationexchange. A custom communication exchange may include communicationbetween a consumer device, a merchant, an acquirer and an issuer. Theconsumer device communicates with a merchant. The merchant thencommunicates with an acquirer, which in turn communicates with anissuer. Intermediaries may facilitate the communication between themerchant and the issuer. Upon receipt of approval by the issuer, theissuer communicates the approval to the acquirer, and the acquirercommunicates the approval back to the merchant. The communication mayinclude generation of an updated custom communication exchange. Thecommunication may include information about transaction economics aswell as rewards information, transaction information, accrued benefitsoverall (total points displayed on the receipt), etc.

In some embodiments, the updated custom communication exchange may betransmitted from the point of sale directly to an issuer. It should beappreciated that, in these embodiments, an acquirer and/or network isremoved from the communication exchange and/or the acquirer is replacedwith a combined acquirer/issuer. In other embodiments, the updatedcustom communication exchange may be transmitted from the point of saleto an issuer, via an acquirer.

The updated custom communication exchange may include a revisedinterchange rate passed on to the merchant by the acquirer. The revisedinterchange rate may be passed on, by the acquirer, to a merchantassociated with the point-of-sale device. The revised interchange ratemay be less than an interchange rate included in the initial customcommunication exchange.

The updated custom communication exchange may include a purchase priceassociated with the purchase. The purchase price may be less than apurchase price included in the custom communication exchange. In someembodiments, the selected reward option may be a non-monetary reward.The non-monetary reward may include a free item, a free service and/or afree upgrade. The non-monetary reward may grant the customer access toexclusive products and/or services not available to the general public.The non-monetary reward may include enabling one or more purchases at apreferred shopping time. The non-monetary reward may include any othersuitable non-monetary reward. In these embodiments, the purchase pricemay equal to a purchase price include in the custom communicationexchange. Therefore, in order to communicate the selected reward optionto the issuer, a selected reward option complete tag may be associatedwith the updated custom communication exchange.

The updated custom communication exchange may include a reward tag. Thereward tag may be associated with the purchase of the item. The rewardtag may be reset to zero from a non-zero value included in the customcommunication exchange. The zero value may trigger removal of thepurchase from a points eligibility list.

The updated custom communication exchange and/or the customcommunication exchange may include interchange information, othereconomic information, reward information, transaction information,accrued benefits total and any other suitable information. In someembodiments, the accrued benefits total or total points accrued for aspecific card product may be displayed on a receipt on the customer.

The platform may be configured so that each merchant device may updateoffers, transmit additional offers and/or remove offers in real-time.

In some embodiments, the plurality of consumer devices may be a firstplurality of consumer devices. The first plurality of consumer devicesmay be a second plurality of consumer devices. A consumer deviceincluded in the first plurality of consumer devices may be configured toshare at least one selectable reward option with a subset of the secondplurality of consumer devices. The subset may be a predefined subset.The subset may be distinct for each consumer device. The subset may bedefined by the consumer device.

The consumer devices included in the subset may be configured to receivelike and/or dislike comments to shared reward offers. The like and/ordislike comments may be displayed on the virtual display of the consumerdevices included in the subset. The consumer devices included in thesubset may be configured to receive a selection of the shared offers.

A method for rerouting a communication from a first network to a secondnetwork is provided. The first network may include a merchant. Themerchant may be in communication with an acquirer. The acquirer may bein communication with an issuer. The second network may include at leastone merchant. The merchant may be in direct communication with theissuer independent of communication with an acquirer. The second networkmay include one or more intermediaries to facilitate the communication.

The method may include receiving a selectable reward option at an offerplatform. The reward option may be received from a merchant device. Themerchant device may be included in a plurality of merchant devices.

The method may include displaying the reward option on a virtualdisplay. The virtual display may be displayable on the plurality ofmerchant devices and on the plurality of consumer devices. The methodmay include receiving a selection of a selectable reward option from aconsumer device. The method may include storing the selected rewardoption on the consumer device. The method may include storing theselected reward option on the offer platform.

The method may include receiving a request for a purchase communicationat a point-of-sale associated with the merchant. The purchasecommunication may be associated with the selected reward option. Uponreceipt of the request, a rerouting of the purchase communication viathe second network may be triggered. The method may include transmittingthe purchase communication directly from the merchant to the issuer viathe second network. It should be appreciated that fees for use of thesecond network may be less than fees charged for use of the firstnetwork. The second network may be associated with reduced or rebatednetwork fees and/or reduced/rebated acquiring fees. Such fee reductionsor rebates may be applied to compensate the merchant for providingcustomers with custom reward programs. In addition to reductions orrebates of specific transaction fees, other economic incentives may beapplied.

In some embodiments, each selectable reward option may include a rewardmetadata file. The reward metadata file may include information such asgeographic location information, target age information, market data,target income bracket and/or any other suitable information. In theseembodiments, each consumer device may include a dynamic consumermetadata file. The dynamic consumer metadata file may includeinformation such as current geographic location information, ageinformation, spend trends and analysis, income information, social mediadata and/or any other suitable information. The dynamic consumermetadata file may be updated when a consumer enters a predeterminedlocation. The location may be a shopping center. A consumer associatedwith the consumer device may enable and/or disable the updating of thedynamic consumer metadata file.

A processor may determine which reward options are relevant for whichconsumer devices based on a correlation value between the dynamicconsumer metadata file and the reward metadata file being greater than apredetermined correlation value. The display of each consumer device maybe configured to display the reward options that are determined to berelevant.

A system for offering rewards is provided. A reward may be provided by amerchant. The merchant may offer rewards based on location. A merchantmay offer rewards that are specific to customer behavior. Such customerbehavior may include geolocation, spend analysis, market data and socialmedia data. Merchant may also create rewards that promote specificcustomer behavior. Such specific customer behavior may include onlinepre-ordering of services and/or products. Such specific customerbehavior may include purchasing specific items.

Merchants may use the merchant-funded reward to steer or direct adesired customer behavior. For example, a merchant may provide a rewardonly if a customer uses a self-service check-out kiosk. A merchant mayprovide a reward only if a customer orders ahead with his/her mobiledevice. A merchant may provide a reward only if a customer shops withina desired department within a shop. A merchant may provide a reward onlyif a customer shops at a specific merchant location. A merchant maymodify rewards in order to promote specific customer behavior atdifferent locations, different seasons, various times of day or anyother reason.

A new card product may offer merchant-funded rewards and reduce costsfor the merchant. This may be the exclusive reward associated with thiscard. This card may be promoted by merchants because the card isassociated with a lower net merchant discount. In some embodiments,custom rewards can be used to enhance an already existing card productoffered by an issuer. For example, card products offered by the merchantmay be eligible for opting into a custom rewards program or retaining anassociation with other rewards programs. In such embodiments, the otherrewards programs may be the default rewards programs associated with thecard product. In other embodiments, custom rewards may be the defaultrewards program and customer may opt-out of custom rewards and opt intoanother rewards program. In other embodiments, custom rewards may be theexclusive rewards program for a card product.

A custom rewards network may be used to handle custom reward products,such as the new card product. Using the custom network, network and/oracquirer fees may be lowered by avoiding traditional network fees.Customers may opt-in to merchant-funded rewards. Upon customer opt-in, ashift may be triggered to the custom rewards network. Rewards may beoffered at the point-of-sale. If a customer accepts, the transaction maybe rerouted to the custom rewards network.

A social media platform may be created around the custom rewards networkand/or card product. Cardholders may be able to share offers, receiveoffers and like and/or dislike offers on the social medial platform. Itshould be appreciated that the social media platform may extend tonon-cardholders as well. Cardholders may be able to share offers withnon-cardholders. This may encourage the non-card holders to apply forthe new card.

A real-time market may be instantiated. The real-time market may enablemerchants to offer customers a variety of reward choices. Customers mayselect rewards that meet their respective needs. Merchants may be ableto view competitor's reward bids. The marketplace may create real-timecompetition for cardholder business.

Apparatus and methods described herein are illustrative. Apparatus andmethods in accordance with this disclosure will now be described inconnection with the figures, which form a part hereof. The figures showillustrative features of apparatus and method steps in accordance withthe principles of this disclosure. It is understood that otherembodiments may be utilized, and that structural, functional, andprocedural modifications may be made without departing from the scopeand spirit of the present disclosure.

FIG. 1A shows typical credit card transaction settlement flow 100. Flow100 involves transaction participants such as the merchant, thecustomer, and transaction service providers that are identified below.At step 1, the merchant provides information, relating to a proposedtransaction between the merchant and a customer, to a transactionauthorization and clearance provider. The transaction authorization andclearance provider may be a transaction processing network. Thetransaction authorization and clearance provider may provide transactionauthorization and clearance information to the merchant. The transactionauthorization and clearance information may include authorization forthe transaction to proceed.

At step 2, the merchant provides $100 in product to the customer. Thecustomer pays with a credit card. At step 3, the issuer transmits to thecustomer a statement showing the purchase price ($100.00) due. Theissuer collects the purchase price amount, along with interest and feesif appropriate, from the customer. At step 4, the issuer routes thepurchase price amount ($100.00) through the transaction processingnetwork to the acquirer. At step 5, the acquirer partially reimbursesthe merchant for the purchase price amount. In the example shown in FIG.1a , the partial reimbursement is $98.00. The difference between thereimbursement amount ($98.00) and the purchase price amount ($100.00) isa two dollar ($2.00) transaction cost.

At step 6, the acquirer transfers an interchange amount ($1.50), to thetransaction processing network. At step 7, both the acquirer and theissuer pay a transaction processing network fee ($0.07 for acquirer and$0.05 for the issuer) to the transaction processing network.

TABLE 1 Net positions, by participant, based on settlement flow 100(shown in FIG. 1A). Participant Net ($) Issuer (Interest + fees) − 0.05Acquirer 0.43 Transaction processing network 0.12 Merchant −2.00Customer 0

In settlement 100 (shown in FIG. 1A), the transaction fee is based on anexemplary merchant discount rate of 2%. The $1.50 interchange is basedon an exemplary interchange rate of 1.5%. The interchange rate istypically set by the transaction processing network. The sum of thetransaction processing network fees ($0.07 and $0.05) is based on atotal exemplary transaction processing network fee rate of 0.12%.

FIG. 1B shows a device presenting an illustrative offer platform. Theoffer platform may include one or more than one user interface, such asgraphic user interface (GUI) 101 and/or GUI 103.

GUI 101 and/or GUI 103 may include one or more platform features. Theplatform features may include one or more “widgets”, windows, virtualtabs, virtual buttons and/or virtual toggle switches.

GUI 101 may include a dashboard view. GUI 101 may include a welcomescreen. GUI 101 may include features 109, features 111, and/or features113.

Features 109 may enable logging into or out of one or more than oneplatform account. Features 109 may enable accessing of platforminformation, such as account alerts and/or notifications. Features 109may enable accessing support and/or help information.

Features 111 may include the welcome screen. Features 111 may includeone or more indications identifying the account(s). Features 111 mayinclude photo(s) of one or more than one user associated with theaccount(s). Features 111 may include a name(s) and/or username(s) of theuser(s).

Features 113 may present general account information associated with theaccount(s). Features 113 may facilitate accessing the account(s).Features 113 may facilitate transaction(s) with one or more thirdparties. Features 113 may facilitate accessing of GUI 103.

GUI 103 may include an account screen. GUI 103 may include detailedinformation associated with one or more of the account(s). GUI 103 mayinclude features 115 and/or features 117. Features 115 may enablelogging into or out of the account(s). Features 115 may enable accessingof additional account information, such as account alerts and/ornotifications. Features 115 may enable accessing support, customerservice and/or help information.

Features 117 may include detailed account data, such as account historyand/or upcoming account events. Features 117 may facilitate making oneor more payments to the account and/or updating account information.Features 117 may facilitate accessing of GUI 101.

FIG. 1C shows the device presenting an illustrative custom offerplatform. The custom offer platform may include one or more than oneuser interface, such as GUI 105 and/or GUI 107. GUI 105 and/or GUI 107may include one or more of the platform features described in connectionwith FIG. 1B.

GUI 105 may include one or more than one of the features described inconnection with GUIs 101 and 103. GUI 105 may include proactive “shadowbox” 119. Shadow box 119 may include one or more than one pop up window.Shadow box 119 may present one or more than one custom merchant rewardoffer associated with one or more than one payment instrument. Shadowbox 119 may include general and/or detailed information regarding theoffer(s). Shadow box 119 may include one or more than one of thefeatures configured to facilitate accepting and/or registering for theoffer(s).

Shadow box 119 may be configured to be presented in response to atriggering event. The event may include detected proximity of the userto a geographic location. The location may be associated with the offer,such as a location of a merchant presenting the offer. The event mayinclude a detected purchase by the user associated with the offer, suchas a purchase of a similar or related product and/or service.Presentation of shadow box 119 may be over GUI 103. The event mayinclude activation of one or more of the features of GUI 101, GUI 103and/or GUI 107.

Upon presentation of GUI 105, shadow box 119 may occlude one or morethan one portion of GUI 103. Upon presentation of GUI 105, one or morethan one remaining portion of GUI 103 may be shaded and/or inaccessibleuntil removal of shadow box 119.

GUI 107 may include a customer rewards screen. GUI 107 may include someor all of the features described in connection with GUIs 101, 103 and105. GUI 107 may present general information regarding one or morereward offers. GUI 107 may include one or more features for acceptingand/or rejecting the offers, such as features 121, 123 and 125.

GUI 107 may include one or more “Learn More” buttons. Selecting a “LearnMore” button may link to and/or take a user to a website, application,or other applicable medium where the merchant may promote the merchantbrand, message, and/or reward value. Information accessed throughselecting a “Learn More” button may increase a user's likelihood ofopting-in to merchant-funded rewards.

FIG. 2 shows an illustrative chart 200 showing the values received by acustomer 202, a merchant 204 and a bank issuer 206 when using amerchant-funded rewards program. Customer 202, merchant 204 and bankissuer 206 may all benefit from having the capability of opting in to anMFR at a point-of-sale.

When using the merchant-funded rewards program, customer 202 may receiverewards that are greater in value than the standard rewards. Customer202 may select the rewards that best fit their life priorities. Customer202 may use the payment instrument at all merchants that accept thepayment instrument.

Merchant 204 may benefit from participating in the merchant-fundedrewards program. Providing merchant-based rewards may incentivize thecustomer to shop at participating merchants. Offering rewards anddisplaying the rewards in real-time to the customer may market themerchants brand regardless of whether the customer opts-in to themerchant-funded rewards program. In a merchant-funded rewards programarchitecture, merchant 204 may control its marketing message andbehavior requirements. Merchant 204 may convert the card acceptancecosts to marketing in order to drive sales.

Bank issuer 206 may benefit from participating in the merchant-fundedrewards program. Bank issuer 206 may not lose out by participating withthe merchant-funded rewards program. New innovative products of amerchant may enrich the bank issuer value proposition. Bank issuer 206may gain from the direct interaction between the merchant and theissuer, thereby increasing sales while using a specific issuer-basedcard product. Bank issuer 206 may facilitate the merchant-customerinteraction. Bank issuer 206 may create advocacy and drive new customeracquisition.

FIG. 3 shows an illustrative pictorial diagram 300 showing the valuespaid and received by a customer, merchant, acquirer/network and issuerwhen using an offer platform. Column 302 represents the values paid andreceived by a customer. The customer may seek to maximize value in hisor her shopping and payments. Column 304 represents values paid andreceived by a merchant. A merchant may seek to increase sales and buildloyalty. Column 306 represents values paid and received by anacquirer/network. An acquirer/network may maintain security, stability,and ubiquity of credit transactions. Column 308 represents values paidand received by an issuer. An issuer may seek to increase sales andbuild brand loyalty.

In diagram 300, row 310 represents values associated with a credittransaction using a conventional rewards system. A conventional rewardssystem may be funded by the issuer. The economics of the conventionalrewards system may support the issuer bank brand, customer loyalty, andmessaging to an issuer bank customer base. Row 312 represents valuesassociated with a credit transaction using a merchant-funded rewardssystem. The economics of a merchant-funded rewards system may supportthe merchant brand, customer loyalty, and messaging to a merchantcustomer base. The following paragraphs describe the transactions shownin each row.

The current paragraph describes the transaction shown in row 310. Thecustomer in column 302 may link a payment instrument to a POS terminalto initiate a purchase. The purchase price may be $100. The cost ofacceptance of the credit transaction may be the transaction costincurred by the merchant. The cost of acceptance is represented incolumn 304. In the example shown, the merchant may pay 230 basis points(bps). One bps corresponds to 0.01 of a percent. In the example shown,the merchant may pay $2.30 as a transaction cost. 30 bps from thetransaction cost, which is $0.30 in the example of row 310, is receivedby the acquirer/network, shown in column 306. 150 bps, which is $1.50 inthe example of row 310, is paid by the issuer as a bank reward 314,shown in column 308. Reward 314 is received by the customer, as shown incolumn 302.

The current paragraph describes the transaction shown in row 312. Thecustomer in column 302 may link a payment instrument to a POS terminalto initiate a purchase. The purchase price may be $100. The cost ofacceptance of the credit transaction may be the transaction costincurred by the merchant. The cost of acceptance is represented incolumn 304. In the example shown, the merchant may pay 80 bps. In theexample shown, the merchant may pay $0.80 as a transaction cost. Analternative processing network used in an MFR linked transaction may notinclude acquirer/network in column 306. The issuer may not pay any valuein rewards. The additional value received by the issuer may be used tomanage the alternative processing network. The merchant, shown in column304, may pay the merchant reward 316 directly to the customer. Thereward 316 may be designed so that the cost to the merchant is less thanthe perceived value of the reward to the customer. In the exemplarytransaction of row 312, the merchant may offer a reward that costs lessthan $1.50, yet is valued by the customer at greater than $1.50. Thetotal transaction cost to the merchant is then less than the $2.30transaction cost of row 310. Furthermore, the reward 316 received by thecustomer, shown in column 302, may be greater in row 312 than the $1.50received in row 310.

FIG. 4 shows an illustrative outline 400 showing various models whichcan be used with the merchant-funded rewards offer platform. At 402, ahigh-level description of the various rewards alternatives used inconnection with a pre-existing payment instrument is portrayed.Merchant-funded rewards architecture may be a mechanism wherebymerchants can opt-in to various rewards alternatives that are associatedwith varying levels of reduced/rebated acquirer and/or network fees.Mechanism may provide real-time data and pricing. Merchant selectionsmay be implemented in real-time. They may be implemented at a POSterminal. They may be implemented online. They may be accrued and/orbatch settled at time intervals.

At 404, mechanisms by which a customer may select optimal rewardsoptions is described. A customer may select reward options via email,mobile and/or online banking.

At 406, notification-types of the rewards availability is described. Thenotification-types may be geolocation, spend analysis, market data andor social media data.

At 408, a rewards market place is described. The rewards market placemay be a real-time market by which merchants may bid on a rewards level.The rewards level may enable customers to select rewards that meet theirneeds and/or standards. Rewards market place enables merchants to seecompetitor's rewards bids. Rewards market place may enable real-timecompetition for bank issuer cardholders' business.

At 410, mechanisms for routing of the rewards are described. When amerchant is notified of a cardholder's rewards selection, the cardsautomatic enrollment in an alternative network may be triggered. Thealternative network may automatically apply the cardholder economics ofthe reward selection. The cardholder economics may include monetaryrewards. The monetary rewards may include cash-back rewards. The cashback may be instant at the POS. The cash back may be applied as aninstant statement credit or accrued and redeemed at specified and/orselected intervals.

Rewards may be non-monetary in nature. For example, rewards may beupgrades, free items, enhanced service and/or preferred service times.Mechanisms may allow customers to select which options they prefer.Options may include real-time or accrued rewards. The alternativenetwork may apply a merchant's economic model to the reward selection.The economic model may include reduced (or rebated) acquirer and/ornetwork fees. The reduction or rebate may be based on the reward offeredby the merchant to a customer. The merchant selection of a reward tooffer the customer may be based on the magnitude of the reduction. Aneconomic model may be applied in real-time or may be batch settled.

FIG. 5 shows illustrative system 500 for processing and communicatingtransaction cost information. System 500 may include merchant component502, network component 504 and issuer component 506. In general, asystem such as 500 may include many merchant components such as 502,many issuer components such as 506 and many network components such as504.

A customer may purchase goods by transferring customer information froma personal data storage device, such as a credit card, to point-of-sale(“POS”) terminal 508. POS terminal 508 may read the customer informationfrom the card. The card may store data in a magnetic strip, a bar code,a silicon chip or any other suitable data storage device or format.

The customer information may include issuer information, accountinformation and any other suitable information.

POS terminal 508 may transmit transaction information to POS controller510. The transaction information may include some or all of the customerinformation and any other suitable information, such as the transactionamount, information regarding the purchased goods and one or more valuesassociated with the transaction.

POS controller 510 may act as a server for providing user prompts anddisplay layout information to one or more POS terminals such as POSterminal 508. POS controller 510 may receive transaction informationfrom one or more of the POS terminals.

POS controller 510 may transmit transaction information to host datacapture system 512. Host data capture system 512 may store transactioninformation from POS controller 510. Host data capture system 512 maystore accounting data, inventory data and other suitable data that maybe included in the transaction information.

The transaction information may include information about the merchant,the merchant's business, the merchant's network membership, themerchant's business behavior and any other suitable information.Transaction information may include some or all of the information thatis necessary to identify reward eligibility. Rewards eligibility maydepend on factors, such as customer spend rate, purchasing behavior,time/date, geolocation, interchange rate, network rates, merchant type,merchant size, transaction processing method, and any other suitablefactors. Transaction information may include one or more of theforegoing factors and any other suitable factors.

The transaction information may be stored in any suitable element ofmerchant component 502, network component 504 and issuer component 506.For example, transaction cost information may be stored in processor514. Processor 514 may include algorithms that may be used inconjunction with the transaction cost information to identify a customreward for a customer transaction taking place at POS terminal 508.

For example, the merchant may offer different rewards to differentcustomers. Offered rewards may depend of what the customer typicallypurchases (at the merchant or other merchants). After a reward isidentified, processor 514 may transmit the reward, via merchantcomponents 502, to POS controller 510.

Host data capture system 512 may be configured to determine eligibilityfor a reward or rewards program. Host data capture system 512 may trackearning and spending of rewards associated with a payment instrument.POS controller 510 may be configured to determine eligibility for arewards program and/or the earning or spending of rewards.

POS terminal 508 may have one or more interactive features that thecustomer may use. The features may provide the customer with informationthat may help the customer decide whether to execute the transaction.The customer may use the features to obtain more information about themerchant, the transaction, a reward, a rewards program, costs associatedwith different payment instruments, or any other suitable information.

Host data capture system 512 may route the transaction record toprocessor 514. The illustrative systems shown in FIGS. 5 and 6 mayinclude one or more other processors that perform tasks that areappropriate for the components thereof.

Processor 514 may route the transaction record, via network 516, todatabase 518. Network 516 may be a default transaction processingnetwork. Network 516 may be a bypass transaction processing network. Therouting may be governed by the transaction information or rewardseligibility. For example, eligibility for a rewards program may beassociated with a bank issuer number (“BIN”) that is encoded in thecustomer's payment instrument. Authorization engine 520 may render atransaction authorization decision based on the transaction information.

Authorization engine 520 may transmit authorization information back toPOS terminal 508 through network 516, processor 514, host data capturesystem 512 and POS controller 510. The authorization information mayinclude the authorization decision (e.g., “GRANTED” or “DENIED”). Theauthorization information may include some or all of the transactioninformation or rewards information (e.g., specific rewards, eligibilityor rewards accrued). The transaction information may be used byprocessor 514 to route the authorization information back to themerchant and the POS terminal where the customer is present.

FIG. 6 shows illustrative system 600 for processing and communicatingpayment instrument and transaction information. System 600 may includemerchant component 602, network component 604 and issuer component 606.In general, a system such as 600 may include many merchant componentssuch as 602 and many issuer components such as 606. System 600 may haveone or more of the features that are described herein in connection withsystem 500.

In system 600, processor 614 may be present in merchant component 602.Corresponding processor 514 is present in network component 504 (shownin FIG. 5). Processes in accordance with the principles of the inventionmay include one or more features of the process illustrated in FIGS.5-6.

FIG. 7 shows an illustrative flowchart 700 of an exemplary processing ofa credit transaction. The transaction may be initiated by the linking ofa payment instrument with the POS terminal, step 702. At step 704, it isascertained whether the payment instrument is enrolled in MFR. If it is,the processing may be routed to the alternative processing network andthe merchant may communicate directly with the issuer, step 706.

If the payment instrument is not enrolled in MFR, a default orconventional processing network may be used. The default processingnetwork may include step 708, wherein the merchant communicates with theacquirer. The acquirer may then communicate with the transactionmediator, step 710. In step 712 the transaction mediator may communicatewith the issuer. The flowchart depicts how an alternative processingnetwork may accomplish in one step, what a default processing networkmay use 3 steps to accomplish.

The steps of methods may be performed in an order other than the ordershown and/or described herein. Embodiments may omit steps shown and/ordescribed in connection with illustrative methods. Embodiments mayinclude steps that are neither shown nor described in connection withillustrative methods.

Illustrative method steps may be combined. For example, an illustrativemethod may include steps shown in connection with another illustrativemethod.

Apparatus may omit features shown and/or described in connection withillustrative apparatus. Embodiments may include features that areneither shown nor described in connection with the illustrativeapparatus. Features of illustrative apparatus may be combined. Forexample, an illustrative embodiment may include features shown inconnection with another illustrative embodiment.

The drawings show illustrative features of apparatus and methods inaccordance with the principles of the invention. The features areillustrated in the context of selected embodiments. It will beunderstood that features shown in connection with one of the embodimentsmay be practiced in accordance with the principles of the inventionalong with features shown in connection with another of the embodiments.

One of ordinary skill in the art will appreciate that the steps shownand described herein may be performed in other than the recited orderand that one or more steps illustrated may be optional. The methods ofthe above-referenced embodiments may involve the use of any suitableelements, steps, computer-executable instructions, or computer-readabledata structures. In this regard, other embodiments are disclosed hereinas well that can be partially or wholly implemented on acomputer-readable medium, for example, by storing computer-executableinstructions or modules or by utilizing computer-readable datastructures.

Thus, methods and systems for providing alternative processing networksfor custom rewards transactions are provided. Persons skilled in the artwill appreciate that the present invention can be practiced by otherthan the described embodiments, which are presented for purposes ofillustration rather than of limitation, and that the present inventionis limited only by the claims that follow.

What is claimed is:
 1. A dual-track point-of-sale (POS) terminal systemcomprising: a POS terminal that enables a customer to purchase one ormore products from a merchant, said products comprising goods and/orservices, the POS terminal configured to: capture customer paymentinstrument information; initiate a credit transaction for said products,the credit transaction comprising: a financial entity that is an issuer,said issuer that extends payment credit to the customer for a purchaseand collects a monetary sum from the customer as compensation for thepayment credit; and a duality of processing networks, each processingnetwork configured to: enable the merchant to communicate to the issuera request for authorization of the credit transaction; enable the issuerto communicate to the merchant a response to the authorization request,said response either granting or denying the authorization; and settlethe credit transaction, said settlement comprising debiting the issuer afirst monetary amount, crediting at least a part of the first monetaryamount to the merchant as a second monetary amount, the differencebetween the second monetary amount and the purchase price of theproducts in the credit transaction being a transaction cost; saidduality of processing networks comprising: a default processing network,said default processing network that comprises an acquirer bank and atransaction intermediary, said acquirer that processes the transactionon behalf of the merchant and said transaction intermediary that enablescommunication between the acquirer and the issuer; an alternativeprocessing network, said alternative processing network that enablesdirect communication and settling between the merchant and the issuer,wherein the merchant and the issuer are different entities, and whereinthe transaction cost associated with the default processing network ishigher than the transaction cost associated with the alternativenetwork; a first track of customer transaction rewards associated with adefault reward program funded by the issuer of the payment instrumentand implemented via the default processing network, the first trackrewards pre-associated with the payment instrument; and a second trackof customer transaction rewards associated with a merchant-funded rewardprogram and implemented via the alternative processing network, thesecond track rewards associated with the same payment instrument as thefirst track rewards; wherein: the transaction rewards are provided tothe customer upon using the payment instrument for a purchase; thetransaction rewards are associated with a first value received by thecustomer and a second value corresponding to the cost to an issuer or amerchant in providing the transaction reward, the first value higherthan the second value; and the transaction cost associated with thealternative processing network is reduced by an issuer-funded rebate,the amount of the issuer-funded rebate determined based at least in parton the cost of the second track rewards to the merchant; notify thecustomer of a first track reward and a second track reward associatedwith the payment instrument for an initiated credit transaction, thefirst track reward comprising a default reward funded by the issuer ofthe payment instrument and the second track reward comprising amerchant-funded reward that is formulated by a merchant computer system,said merchant computer system that comprises at least one processor; andreceive a customer selection of one of the two tracks of rewards for theinitiated credit transaction, wherein a customer selection of the secondtrack: triggers enrollment of the payment instrument in the alternativetransaction processing network; opts the customer in to themerchant-funded reward program for the initiated credit transactionusing the payment instrument; terminates the customer's enrollment inthe default reward program for the initiated credit transaction usingthe payment instrument; reroutes the processing of the initiated credittransaction, said rerouting comprising disassociating the credittransaction from being processed on the default processing network andprocessing the credit transaction on the alternative processing network;notifies, via the alternative processing network, the merchant of thecustomer's selection of the merchant-funded reward; and enables thecustomer to receive the merchant-funded reward.
 2. The system of claim1, wherein the rerouting and authorization of the credit transaction iscompleted within 5 seconds of the customer opting-in to themerchant-funded reward.
 3. The system of claim 1, wherein the POSterminal notifies the customer of a merchant-funded reward offer within5 seconds of the customer initiating the transaction at the POS terminalwith the payment instrument.
 4. The system of claim 1, wherein themerchant-funded reward offered to the customer is formulated independentof an initiated transaction.
 5. The system of claim 4, wherein theindependently formulated merchant-funded reward is stored at the POSterminal.
 6. The system of claim 1, wherein the merchant-funded rewardoffered to the customer is formulated in response to the customerinitiating a transaction with the payment instrument at a POS terminal.7. A merchant-funded rewards (MFR) payment system comprising: apoint-of-sale (POS) terminal, said POS terminal that enables a customerto purchase one or more products from a merchant, said productscomprising goods and/or services; a payment instrument, said paymentinstrument that enables the customer to initiate a credit transaction atthe POS terminal for said purchase, the credit transaction comprising: afinancial entity that is an issuer, said issuer that extends paymentcredit to the customer for a purchase and collects a monetary sum fromthe customer as compensation for the payment credit; a duality ofprocessing networks, each processing network that: enables the merchantto communicate to the issuer a request for authorization of the credittransaction; enables the issuer to communicate to the merchant aresponse to the authorization request, said response either granting ordenying the authorization; and settles the credit transaction, saidsettlement comprising debiting the issuer a first monetary amount,crediting at least a part of the first monetary amount to the merchantas a second monetary amount, the difference between the second monetaryamount and the purchase price of the products in the credit transactionbeing a transaction cost; said duality of procesing networks comprising:a default processing network, said default processing network thatcomprises an acquirer bank and a transaction intermediary, said acquirerthat processes the transaction on behalf of the merchant, and saidtransaction intermediary that enables communication between the acquirerand the issuer; an alternative processing network, said alternativeprocessing network that enables direct communication and settlingbetween the merchant and the issuer, wherein the merchant and the issuerare different entities and the transaction cost associated with thedefault processing network is higher than the transaction costassociated with the alternative processing network; a first track oftransaction rewards associated with a default reward program funded bythe issuer of the payment instrument and implemented via the defaultprocessing network; and a second track of transaction rewards associatedwith an MFR program and implemented via the alternative processingnetwork, the second track rewards associated with the same paymentinstrument as the first track rewards; wherein: the transaction rewardsare provided to the customer upon using the payment instrument for apurchase; the transaction rewards are associated with a first valuereceived by the customer and a second value corresponding to the cost tothe issuer or the merchant in providing the transaction reward the firstvalue higher than the second value; and the transaction cost associatedwith the alternative processing network is reduced by an issuer-fundedrebate, the amount of the issuer-funded rebate based at least in part onthe cost of the second track rewards to the merchant; a merchantcomputer system comprising at least one processor and configured toformulate an MFR offer to the customer, the offer comprising aqualifying payment instrument, a qualifying POS terminal and the rewardterms; and at least one notifying device configured to display the MFRoffer to the customer and receive a selection of the offer from thecustomer, said selection comprising opting-in to the MFR program;wherein customer selection of the MFR offer: terminates enrollment ofthe payment instrument in the default rewards program for an initiatedcredit transaction; and reroutes the processing of the initiated credittransaction, said rerouting comprising disassociating the credittransaction from being processed on the default processing network andprocessing the credit transaction on the alternative processing network;triggers the enrollment of the payment instrument in the alternativetransaction processing network; notifies, via the alternativetransaction processing network, the merchant of the customer's selectionof the MFR offer; and completion of the initiated credit transaction byan opted-in customer with the enrolled payment instrument at aqualifying POS terminal enables the customer to receive the MFR.
 8. Thesystem of claim 7, wherein the rerouting and authorization of the credittransaction is completed within 5 seconds of the initiation, by acustomer who opted-in to the MFR program, of a credit transaction with aqualifying payment instrument at a qualifying POS terminal.
 9. Thesystem of claim 7, wherein the MFR offered to the customer areformulated independent of the initiation of a transaction.
 10. Thesystem of claim 9, wherein the independently formulated MFR are offeredto the customer on a notifying device independent of customer activity.11. The system of claim 9, wherein the independently formulated MFR areoffered to the customer on a notifying device when the customer enters apredetermined location.
 12. The system of claim 7, wherein the MFRoffered to the customer are formulated in response to the customerinitiating a transaction with a payment instrument at a POS terminal.13. The system of claim 7, wherein the MFR offered to the customer areformulated in response to the customer entering a predeterminedlocation.
 14. The system of claim 7, wherein the customer selection toopt-in to the MFR program is stored locally at a qualifying POSterminal.
 15. A method of electronically processing credit cardpayments, the method comprising: formulating, on a merchant computersystem processor, a set of merchant-funded rewards (MFR) to offer to acustomer, said offer comprising a qualifying payment instrument, aqualifying point-of-sale (POS) terminal, and terms of the reward,wherein the qualifying payment instrument is pre-enrolled in a defaultreward program funded by the issuer of the payment instrument andimplemented by a default processing network; notifying the customer ofthe MFR offer via a notifying device; receiving a request from acustomer to opt-in to the MFR; in response to receiving the request:linking the qualifying payment instrument of the customer to the MFRoffer; terminating the enrollment of the qualifying payment instrumentin the default reward program; and triggering enrollment of thequalifying payment instrument in an alternative transaction processingnetwork; receiving an authorization request from the merchant to processa transaction initiated by the qualifying payment instrument at thequalifying POS terminal; and in response to receiving the authorizationrequest from the merchant: detecting that the payment instrument islinked to the MFR offer; rerouting the processing of the transactionfrom the default processing network to the alternative processingnetwork, said default processing network that comprises an acquirer bankand a transaction mediator, said transaction mediator that enablescommunication and monetary exchanges between the merchant-side acquirerand the customer-side issuer to settle the transaction, and saidalternative processing network that comprises a direct connectionbetween the merchant and the issuer, said direct connection enablingcommunication and monetary exchanges to settle the transaction, whereinboth the default processing network and alternative processing networkimpose a fee on the merchant for processing the transaction and the feeimposed by the alternative processing network is reduced by anissuer-funded rebate corresponding to the cost of the MFR offer to themerchant; notifying, via the alternative processing network, themerchant of the customer's request to opt-in to the MFR; and processingthe transaction, using the qualifying payment instrument, on thealternative processing network.
 16. The method of claim 15, wherein thererouting of the processing to the alternative processing network, inresponse to a customer request in a current transaction, becomes the newdefault processing route for subsequent purchases from the merchantusing the payment instrument.
 17. The method of claim 15, wherein thelinking of the payment instrument to the MFR offer, in response to acustomer request in a current transaction, becomes the new defaultrewards program for subsequent purchases from the merchant using thequalifying payment instrument.
 18. The method of claim 15, wherein thererouting and authorization of the credit transaction is completedwithin 5 seconds of the initiation of a transaction with an MFR-linkedpayment instrument at a qualifying POS terminal.